Religious Norms Affecting the Recognition and Enforcement of Arbitral Awards
The Europlace Commission found that the application of traditional Islamic rules in arbitration processes “risks annulling the award by contradicting the public policy... Arbitrators should therefore refrain from applying these discriminatory rules since it is their duty to ensure the effectiveness of their awards”.[1002] By recognising that a potential conflict between religious and legislative norms can be avoided by observing public laws instead of following religious dogma in order to ensure a valid and enforceable award, the Commission also recognised that the influence of religion over arbitration does not end with the closing of the arbitral procedures.
88 Baker, above n 66, 51.
89 Ibid.
Islamic rules on recognition and enforcement
Normally, arbitral awards are easily enforceable in any jurisdiction, the Model Law and the NY Convention,[1003] ensuring that the vast majority of jurisdictions will give legal force to arbitral awards whether rendered within or outside of that jurisdiction.[1004] According to these uniform rules, the possible grounds to refuse recognition and enforcement of arbitral awards are very limited, mainly focusing on procedural fairness and public policy.[1005] The limits of these grounds, however, can be stretched by aspects not considered when drafting these legal harmonisation tools, like the influence of religion over arbitral proceedings.
In addition to the very limited grounds listed in the NY Convention,[1006] recognition and enforcement of an arbitral award may be denied in Islamic countries on the ground that it does not meet the compliance requirements of Shari’a law.[1007] In this sense, awards made in Saudi Arabia under foreign law by an arbitrator who does not fulfil Shari’a qualifications were deemed non-compliant with Shari’a law under the Old Arbitration Law, irrespective of the content of the award.[1008] Although the New Arbitration Law does not contain the same requirement anymore, the requirement for the award not to contravene Shari’a and the public order of Saudi Arabia, still exists.[1009]
Under the Old Arbitration Law, in addition to checking the arbitrators’ qualification, the Saudi Board of Grievance[1010] also conducted a full review of the case, to ensure that the award did not conflict with any principles of Shari’a law.[1011] Reviewing an arbitration case on its merits stretches beyond acceptable limits the ex officio verification of public policy compliance introduced by the NY Convention.
Applying public policy in a manner that allowed the Board of Grievance to, in effect, re-litigate the case,[1012] implicitly denied the final and binding character of arbitral awards. As a result, apparently there was little or no precedent for the recognition and enforcement of foreign arbitral awards by the Board of Grievance[1013] — a hurdle that was not reasonably foreseen by foreign arbitrating parties when undertaking arbitration in the first instance.Under the New Arbitration Law, however, Saudi Arabia appears to be in alignment with the common international practice that an arbitral award is recognised as being valid and is enforced to the extent that it does not contravene public policy or is not set aside due to other contingencies that are provided for under the Model Law.[1014] Accordingly, the New Arbitration Law provides that the arbitration award issued in accordance with this Law shall be valid and in force” (article 52), and “are not to be challenged in any way except through the filing of a lawsuit to nullify an arbitration award according to the provisions of this Law” (article 49). Whether these new provisions generally reflecting the same grounds for challenge provided for under the Model Law will be in line with contemporary cultural thinking of the Saudi population and institutions, or whether the traditional, dogmatic perceptions will somehow infiltrate in the application of new law, is yet to be seen.
Post-award consequences of prior Islamic influence over the arbitration
Religious influences that take place in an arbitration’s earlier phase may also reveal their undesired consequences when the resulting award is tested for recognition and enforcement in a secular legal system. The perception of a spiritual leader as an arbitrator may, for example, prove to be erroneous only after the entire dispute resolution process has been completed. This may occur if the nature and role of the spiritual leader’s involvement in the resolution of the dispute and whether this spiritual leader was to be involved with a view to producing a legally enforceable result, is not decided or precisely formulated by the parties.[1015] Nonrecognition of an “award” rendered under these circumstances erodes the benefits of religious arbitration, and indeed arbitration itself.
Whilst awards in the context of religious arbitration may be subject to stringent conditions and may not be enforceable due to non-compliance with religious norms, the same may be true of awards rendered by religious arbitral tribunals that do not comply with secular legal requirements.
Indeed, arbitral awards rendered under religious influences may also fail legal recognition, if the arbitration process is subjected to religious norms that are deemed to be discriminatory under the legislation of the country where the resulting award is sought to be enforced. In this sense, arbitral awards rendered under the Old Arbitration Law in Saudi Arabia, which imposed religious and gender-based restrictions on arbitrators against the parties’ will, were perceived to be in breach of public policy in any jurisdiction where anti-discriminatory principles are highly valued. Similarly, traditional Islamic (or Judaic) rules limiting the freedom or the value of a woman’s witness testimony, would be found to seriously affect due process principles, and as such, lead to nonrecognition and enforcement of that arbitral award in a secular system — creating undesired uncertainty in the international business environment.Recognition and enforcement of Judaic arbitral awards
Difficulties in the post-award phase are also encountered by members of Jewish communities, who are often compelled to resolve their disputes before their respective religious institutions. The qualification of such institutions and the enforcement of their decisions by State courts can be problematic and this difficulty may even be seen to undermine religious autonomy. A decision by a dayanim105 that any future disputes between the parties in regard to their disputed contract must be decided by the Beth Din was, for example, qualified by the State court as retention of future jurisdiction exceeding the authority of the Beth Din.[1016] [1017] The judgment generated wide-spread concerns in the Jewish community. Organisations like the Agudath Israel of America, the Orthodox Union, and the American Jewish Congress filed amicus briefs in support of the Beth Din’s decision, pointing to the relationship between religious and State courts. The fear of the Beth Din system being devastated by State courts was eventually dissipated by the commitment expressed through the decision of the Supreme Court’s Appellate Division[1018] to respect an award rendered by a Beth Din without re-litigating the merits of the case. Characteristics of Judaic arbitration may, however, also exceed the acceptable limits of classical arbitration, leading to the non-recognition of the award resulted. In another fairly recent US case,[1019] the Court denied enforcement of a Beth Din award for one of the parties having been compelled to use only counsel acceptable to the Beth Din. In traditional Jewish law, litigants were discouraged from retaining counsel, because lawyers were viewed as canvassing the cause of their client as opposed to pursing justice as mandated in the halacha.[1020] The issue of whether representation is permitted in modern arbitration is yet to be settled,[1021] but in the case mentioned, whilst the petitioning party was not denied his right to appoint a representative, he was denied the right to a counsel of his choice, eventually proceeding without representation. This restriction proved to be in conflict with the laws of the State of New York which grant individuals the right to select counsel they believe is best able to provide them with competent representation,[1022] Thus, although the Beth Din was only enforcing traditional Jewish principles, the modern legal environment did not prove to be flexible enough to accommodate such religion-induced processes. As a result, since arbitration is dependent on legal recognition, instead of achieving the binding outcome reasonably expected from arbitration through a personalised process accommodating religious tradition, the religious arbitration proved to be a futile exercise leading to no final solution to the dispute.